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Hewlett-Packard claimed Tuesday that there were substantial instances of financial fraud in connection with its acquisition of the software. Scott Budman reports. (Published Tuesday, Nov. 20, 2012)

Hewlett-Packard claimed Tuesday that there were substantial instances of financial fraud in connection with its acquisition of the software company Autonomy in 2011, and took a one-time $8.8 billion accounting charge.

The company's stock plunged 11 percent by the end of the day.

In its routine quarterly report, the Silicon Valley tech giant based in Palo Alto alleged that there was serious fraud and misrepresentation on the part of Autonomy, a British company. Autonomy's former CEO Mike Lynch said HP's allegations are false, according to reports.

The earnings disclosure showed the company lost nearly $7 billion in the fourth quarter and $12.7 billion for the fiscal year. Its quarterly sales of $30 billion were down 7 percent from the same period a year ago and its $120 billion in fiscal-year sales were off 5 percent from the previous year.

Analysts had always thought the purchase was a mistake and that backlash from the purchase led to the ouster of former CEO Leo Apotheker. Now, many insiders and experts are claiming this wasn't just a mistake but a disaster.

Speaking on CNBC Tuesday morning, CEO Meg Whitman said she "regrets" voting for the purchase when she was on the HP board, and is "seeking redress." She added that the case of "serious accounting improprieties" and the "willful effort to deceive" is now in the hands of the Securities and Exchange Commission.

In the same breath, Whitman said she wanted to "take Autonomy and grow it."

To see the whole interview, click here.

She stated to Marketplace's Kai Ryssdal on Tuesday afternoon that she relied on the accounting of Deloitte, who isn't just a "Brand X'' accounting and auditing firm before buying Autonomy, and that she expected this issue to wind its way through both the U.S. and U.K. courts.

That's also the conclusion of San Francisco attorney Mark Fickes, a former SEC prosecutor. Fickes told NBC Bay Area that Whitman's "willful effort to deceive" statement most likely means HP and Autonomy are heading to court. With nearly $9-billion of investor money on the line, this whole thing screams "court case."

This all is bad news for investors, according to CNBC's Silicon Valley Bureau Chief Jon Fortt. "This is how big companies die", Fortt said. "I'm not saying HP is dead yet, but if they don't turn things around, they could be in big trouble."